Whistle-blowers That Are The First to Properly
File Drug Price Fraud
Lawsuits Can Receive Large Financial Rewards For
Exposing The Drug Company False
Drug Pricing

Pharmaceutical Companies and Drug
Companies that engage in schemes to report false and
inflated prices for pharmaceutical products, knowing
that federal healthcare programs rely on those reported
prices to set payment rates are committing Drug Price
Fraud and can be held liable for these illegal actions.
The difference between the resulting inflated government
payments and the actual price paid by healthcare
providers for a drug is referred to as the “spread.” The
larger the spread on a drug, the larger the profit for
the health care provider or pharmacist who is reimbursed
by the government.

Pharmaceutical Executives that commit
drug pricing fraud, cooperate with other drug executives
that are committing drug price fraud, or fail to report
fraudulent drug price schemes can be held liable for
criminal and civil prosecution. In fact, the
government is cracking done on drug price fraud schemes
and is actively encouraging drug price fraud
whistleblowers to step forward to report fraudulent drug
pricing schemes that are costing government health care
programs like Medicaid, Medicare, Tricare, and the
Veteran's Administration millions of dollars.
Pharmaceutical Sales Executives, Pharmacists, Drug
Representatives, and other health care professionals
that properly blow the whistle on fraudulent drug
pricing schemes can receive a significant recovery on
money recovered by being the first to file on Drug Price
Medicare fraud, Drug Price Medicaid fraud, Drug Price
Tricare fraud, and/or Drug Price VA.

Pharmaceutical executives and
representatives who are the original source of
specialized knowledge of drug pricing fraud can recover
large economic rewards for properly reporting fraudulent
drug pricing schemes. A successful false claims
act qui tam claim can not only result in a significant
recovery for the drug representative whistleblower,
pharmaceutical executive whistleblower, or
pharmaceutical accounting whistleblower, but can result
in uncovering Medicare price fraud, Medicaid price
fraud, Tricare price fraud, and/or VA price fraud that
could result in millions or billions of dollars being
recovered or saved by taxpayers.

There are several keys to a
successful Drug Price Fraud False Claims Act Qui Tam
Whistleblower Lawsuit including 1) obtaining original
and specialized information of the fraud, 2) being the
first to file regarding the specific fraud, and 3)
protecting the whistleblower for retaliation.

It is important for the
pharmaceutical representative whistleblowers, medical
device sales representative whistleblowers, drug
marketing representative whistleblowers, and other drug
executive whistleblowers to blow the whistle on drug
fraud pricing schemes. Below are some press
releases on success Drug Price Fraud Lawsuits that have
been in the news.

BOSTON, Mass. – The Justice
Department announced today that Dey Inc., Dey Pharma
L.P. (formerly known as Dey, L.P.), and Dey L.P. Inc.
have agreed to pay $280 million to settle False Claims
Act allegations. This settlement resolves claims by the
United States that the defendants engaged in a scheme to
report false and inflated prices for numerous
pharmaceutical products, knowing that federal healthcare
programs relied on those reported prices to set payment
rates. The actual sales prices for the Dey products were
far less than what Dey reported.

The United States alleged that Dey
reported false prices for the following drugs: Albuterol
Sulfate, Albuterol MDI, Cromolyn Sodium, and Ipratropium
Bromide. The difference between the resulting inflated
government payments and the actual price paid by
healthcare providers for a drug is referred to as the
“spread.” The larger the spread on a drug, the larger
the profit for the health care provider or pharmacist
who is reimbursed by the government. The government
alleges that Dey The difference between the resulting
inflated government payments and the actual price paid
by healthcare providers for a drug is referred to as the
“spread.” The larger the spread on a drug, the larger
the profit for the health care provider or pharmacist
who is reimbursed by the government.

This is the fourth such settlement
with pharmaceutical manufacturers that the Department of
Justice has announced this month. On Dec.7, 2010, the
Department announced settlements totaling $421.1 million
involving similar allegations against three other
manufacturers: Abbott Laboratories Inc., B. Braun
Medical Inc., and Roxane Laboratories Inc.

“With this settlement, the Department
of Justice has now recovered over $2 billion dollars
from pharmaceutical manufacturers arising from similar
unlawful drug pricing schemes. As the department alleged
in its complaint against Dey, by offering customers one
price and then falsely reporting inflated prices to the
lists the government uses when calculating how much to
pay for the drugs, pharmaceutical companies created an
incentive for the purchase of their drugs by allowing
buyers to pocket the difference between the actual price
of the drug and the inflated government payment,” said
Tony West, Assistant Attorney General for the Civil
Division of the Department of Justice. “Taxpayer-funded
kickback schemes like this not only cost federal health
care programs millions of dollars, they threaten to
undermine the integrity of the choices health care
providers make for their patients.”

United States Attorney Carmen M.
Ortiz of the District of Massachusetts said, “Our
federally-funded health care programs pay for
prescription drugs based in part on pricing information
reported by pharmaceutical companies. When a company
reports falsely inflated prices for the purpose of
increasing its sales and profits, it undermines the
integrity of our health care system. Drug companies must
understand that they risk substantial liability if they
report false drug pricing information.”

The settlement resolves a
whistleblower action filed under the False Claims Act by
Ven-A-Care of the Florida Keys Inc., a Florida
home-infusion company, and its principals, entitled
United States of America ex rel. Ven-a-Care of the
Florida Keys Inc. v. Dey Laboratories, et al., Civil
Action No. 05-11084-PBS (D. Mass.). The False Claims
Act’s qui tam provisions allow private persons with
knowledge of fraud to file suit on behalf of the United
States and share in any recovery. As part of this
settlement, the Ven-A-Care whistleblowers will receive a
share of approximately $67.2 million.

“This settlement with Dey highlights
the Office of the Inspector General’s decade-long
commitment to protecting against artificially inflated
drug prices,” said Daniel R. Levinson, Inspector General
of the Department of Health & Human Services. “Our
analyses of drug price reporting practices – including
the use of ‘Average Wholesale Price’ – have consistently
identified excessive Medicare and Medicaid payments
resulting from these practices.”

The case was investigated and
litigated principally by Assistant United States
Attorneys George B. Henderson, Barbara Healy Smith and
James J. Fauci in Ortiz's Civil Division, with Trial
Attorneys Laurie Oberembt, Justin Draycott, Rebecca Ford
and Assistant Director Renee Brooker from the Fraud
Section of the Justice Department's Civil Division. Mary
Riordan of the Office of Counsel to the Inspector
General, Office of Inspector General, and Leslie
Stafford, Office of General Counsel, U.S. Department of
Health and Human Services, provided assistance in the
investigation, litigation and resolution of all three
cases. Attorneys for Ven-a-Care of the Florida Keys,
Inc. also provided significant assistance in the cases.

This resolution is part of the
government’s emphasis on combatting health care fraud
and another step for the Health Care Fraud Prevention
and Enforcement Action Team (HEAT) initiative, which was
announced by Attorney General Eric Holder and Kathleen
Sebelius, Secretary of the Department of Health and
Human Services in May 2009. The partnership between the
two departments has focused efforts to reduce and
prevent Medicare and Medicaid financial fraud through
enhanced cooperation. One of the most powerful tools in
that effort is the False Claims Act, which the Justice
Department has used to recover more than $5.3 billion
since January 2009 in cases involving fraud against
federal health care programs. The Justice Department’s
total recoveries in False Claims Act cases since January
2009 now approach $6.8 billion.

This resolution is part of the
government’s emphasis on combatting health care fraud
and another step for the Health Care Fraud Prevention
and Enforcement Action Team (HEAT) initiative, which was
announced by Attorney General Eric Holder and Kathleen
Sebelius, Secretary of the Department of Health and
Human Services in May 2009. The partnership between the
two departments has focused efforts to reduce and
prevent Medicare and Medicaid financial fraud through
enhanced cooperation. One of the most powerful tools in
that effort is the False Claims Act, which the Justice
Department has used to recover more than $5.3 billion
since January 2009 in cases involving fraud against
federal health care programs. The Justice Department’s
total recoveries in False Claims Act cases since January
2009 now approach $6.8 billion.

Good morning and welcome. My name is
Tony West, and I’m the Assistant Attorney General for
the Civil Division of the Department of Justice. In that
capacity I oversee much of the federal government’s
civil litigation across the country. I am pleased this
morning to be joined by three great colleagues and
friends: Carmen Ortiz, the United States Attorney for
the District of Massachusetts; Wifredo Ferrer, the
United States Attorney for the Southern District of
Florida; and Dan Levinson, the Inspector General of the
Department of Health and Human Services.

Over the last two years, the Justice
Department—in close collaboration with the Department of
Health and Human Services—has made cracking down on
health care fraud a top priority. Today, we announce the
latest results of those efforts. We have reached
significant settlements with three drug companies—Abbott
Laboratories, Inc.; Roxane Laboratories, Inc.; and B.
Braun Medical, Inc.—settlements that will collectively
return more than $421 million to the Medicare and
Medicaid programs. These settlements stem from lawsuits
in which we’ve alleged that these companies engaged in a
complicated and complex scheme to market their drugs
through an unlawful pricing arrangement that amounted to
kickbacks funded by taxpayer dollars.

Now before my colleagues and I
describe the details of this elaborate scheme, let me
note that these cases are the latest in a string of
settlements, judgments, convictions and fines that are
part of Attorney General Eric Holder’s aggressive effort
to combat fraud in all its forms over the last two
years. In fact, I’m pleased to announce, that since
January 2009, the Civil Division, working closely with
our U.S. Attorney partners around the country, has
recovered more money lost to fraud than ever before—over
$9 billion in civil and criminal cases involving fraud
on American taxpayers and consumers; a staggering and
unprecedented amount that represents the largest
two-year fraud recovery in the Department’s history.

The cases that make up that
record-breaking amount cover the full spectrum of Civil
Division fraud cases: from the financial fraud cases
like mortgage fraud that victimize homeowners who are
already struggling to hold on to their homes; to
procurement fraud cases involving substandard provisions
supplied to our troops in Iraq and Afghanistan; to the
investor fraud scams involving fake business
opportunities that cheat honest small businesspeople out
of their hard-earned investments. Together, these cases
represent an aggressive, coordinated and sustained
effort at the federal level to hold perpetrators of
fraud accountable, be they large companies or
individuals –and over the last two years we have done
just that.

Over half of that record-breaking
sum—more than $5 billion—is comprised of health care
fraud cases like the settlements against Abbott, Roxane
and B. Braun we are announcing today.

These three cases involve something
called the AWP, or “Average Wholesale Price.” That’s the
price companies report to published national pricing
lists as the price of their drugs. The government uses
these same price lists to pay health care providers who
purchased those drugs for their Medicare and Medicaid
patients.

Now this was the honor system:
companies were supposed to report the Average Wholesale
Price they were actually charging for their drugs, but
in fact, we allege, that’s not what they did. Instead,
the AWP reported by these defendants—the same prices
used by the government to pay providers—were greatly
inflated. This allowed drug companies to create an
incentive for the purchase of their drugs, since buyers
could pay the drug companies one price and obtain
government payment at an inflated price and pocket the
difference—essentially a kickback scheme funded by
taxpayer dollars. Not only did this practice cost our
public healthcare programs millions of dollars, it also
threatened to undermine the integrity of the choices
health care providers made for their patients.

In fact, this practice within the
pharmaceutical industry was widespread—so much so that
instead of Average Wholesale Price, “AWP,” it was
jokingly said, really stood for: “Ain’t What’s Paid.”
Indeed, the only purchasers who paid the inflated,
reported drug price were you, the American taxpayers.

Now, this was a very complicated and
hard-fought case that required years of tireless,
persistent and dedicated work by our lawyers, paralegals
and investigators here in the Civil Division, in the
U.S. Attorneys Offices for Massachusetts and the
Southern District of Florida and in the HHS Office of
Inspector General, especially over the last three years.
Without them, this important victory for our public
healthcare programs would not have occurred. It’s a
reminder of the high commitment to public service our
federal civil servants embody.

And now it’s my pleasure to introduce
the United States Attorney for the District of
Massachusetts, Carmen Ortiz.

Boston, MA... United States Attorney
Michael J. Sullivan, Department of Health and Human
Services Inspector General Janet Rehnquist, Assistant
Inspector General for Investigations and Director of the
Department of Defense Criminal Investigation Service
Carol Levy, and Special Agent in Charge of the Federal
Bureau of Investigation in New England Charles S.
Prouty, announced today that:

(1) TAP Pharmaceutical Products Inc.
("TAP"), a major American pharmaceutical manufacturer,
has agreed to pay $875,000,000 to resolve criminal
charges and civil liabilities in connection with its
fraudulent drug pricing and marketing conduct with
regard to Lupron, a drug sold by TAP primarily for
treatment of advanced prostate cancer in men. The global
agreement includes:

(a) TAP has agreed to plead guilty to
a conspiracy to violate the PrescriptionDrug Marketing
Act and to pay a $290,000,000 criminal fine, the largest
criminal fine ever in a health care fraud prosecution.
The plea agreement between the United States and TAP
specifically states that TAP's criminal conduct caused
losses of $145,000,000.

(b) TAP has agreed to settle its
federal civil False Claims Act liabilities and to pay
the U.S. Government $559,483,560 for filing false and
fraudulent claims with the Medicare and Medicaid
programs as a result of TAP's fraudulent drug pricing
schemes and sales and marketing misconduct.

(c) TAP has agreed to settle its
civil liabilities to the fifty states and the District
of Columbia and to pay them $25,516,440 for filing false
and fraudulent claims with the states, as a result of
TAP's drug pricing and marketing misconduct, and from
TAP's failure to provide the state Medicaid programs
TAP's best price for those drugs as required by law.

(d) TAP has agreed to comply with the
terms of a sweeping corporate integrity agreement which,
among other things, significantly changes the manner in
which TAP supervises its marketing and sales staff, and
ensures that TAP will report to the Medicare and
Medicaid programs the true average sale price for drugs
reimbursed by those programs.

(2) A federal grand jury returned an
indictment unsealed today, charging one physician and
six TAP managers with conspiracy to pay kickbacks to
doctors and other customers, conspiracy to defraud the
state Medicaid programs on TAP's obligation to sell
products to those programs at its best price, and
conspiracy to violate the Prescription Drug Marketing
Act by causing free samples to be illegally billed to
the Medicare program. The indictment charges that the
TAP defendants offered to give things of value,
including free drugs, so-called educational grants,
trips to resorts, free consulting services, medical
equipment, and forgiveness of debt, to physicians and
other customers to obtain their referrals of
prescriptions for Lupron to Medicare program
beneficiaries, in violation of the anti-kickback
statute. The indictment also charges that the TAP
defendants aided and abetted, and caused the billings to
hundreds of elderly Medicare program beneficiaries and
to the Medicare program directly, for thousands of free
samples of Lupron, used in the treatment of prostate
cancer, in violation of the Prescription Drug Marketing
Act.

The seven individuals charged in the
indictment unsealed today are:

(1) ALAN MACKENZIE, age 49, of 27068
Wellington Court, Barrington, Illinois, and formerly
Vice President of Sales for TAP.

(2) JANICE SWIRSKI, age 40, of 6
Bellingham Drive, Chestnut Hill, Massachusetts, and
formerly a National Account Manager with TAP.

(3) HENRY VAN MOURICK, age 43, of 23
Golfwood Court, Roseville, California, and currently a
District Manager employed by TAP.

(4) DONNA TOM, age 37, of 141 East
56th Street, New York, New York, and formerly a District
Manager employed by TAP.

(5) KIMBERLEE CHASE, age 35, of 108
Dedham Street, Dover, Massachusetts, and formerly a
District Manager employed by TAP.

(6) DAVID GUIDO, age 30, of 131 New
London Road, Colchester, Connecticut, and currently a
Hospital Account Executive employed by TAP.

(7) DR. JOHN ROMANO, age 48, of 110
Long Pond Road, Plymouth, Massachusetts, an urologist
with a practice in Plymouth, Massachusetts.

Prior to yesterday's indictment, four
other physicians have been charged and have pleaded
guilty in this investigation: Dr. Rodney Mannion, a
urologist practicing in LaPorte and Michigan City,
Indiana, was charged on February 28, 2000 with
healthcare fraud. Dr. Mannion pleaded guilty to that
charge on April 25, 2000. Dr. Jacob Zamstein, a
urologist practicing in Bloomfield, Connecticut, was
charged on November 3, 2000 with healthcare fraud and
pleaded guilty on December 27, 2000. Dr. Joseph
Spinella, a urologist practicing in Bristol,
Connecticut, was charged on December 8, 2000 with
healthcare fraud and pleaded guilty on March 29, 2001.
Dr. Joel Olstein, a urologist practicing in Lewiston,
Maine, was charged on April 11, 2001 with healthcare
fraud and pleaded guilty on July 18, 2001.

Lupron is marketed by TAP primarily
for the treatment of prostate cancer. Lupron is
identical in effectiveness to the drug Zolodex, produced
by a competitor, which was also available for
prescription in the 1990s. While Medicare does not pay
for most drugs needed by Medicare beneficiaries,
Medicare does cover drugs, such as Lupron, that must be
injected under the supervision of a physician. Medicare
paid for 80% of either the urologist's charge for Lupron
or the average wholesale price reported by TAP,
whichever was lower, and the patient was responsible for
the remaining 20% as a copayment.

As part of its civil allegations, the
Government alleged that throughout the1990s, TAP set and
controlled the price at which the Medicare program
reimbursed physicians for the prescription of Lupron by
reporting its average wholesale price ("AWP"). The AWP
reported by TAP was significantly higher than the
average sales price TAP offered physicians and other
customers for the drug. The Government alleged that TAP
marketed the spread between its discounted prices paid
by physicians and the significantly higher Medicare
reimbursement based on AWP as an inducement to
physicians to obtain their Lupron business. The
Government further alleged that TAP concealed the true
discounted prices paid by physicians from Medicare, and
falsely advised physicians to report the higher AWP
rather than their real discounted price for the drug.
The Government further alleged that TAP set its AWPs of
Lupron at levels far higher than the price for which
wholesalers or distributors actually sold the drug,
resulting in falsely inflated prices that were neither
the physician's actual cost nor the true wholesaler's
average price.

"The Medicare and Medicaid drug
programs are bulwarks against the financial hardship
that can be caused by the need for life-saving medical
treatments," said Robert D. McCallum, Jr., Assistant
Attorney General for the Justice Department's Civil
Division. "These programs cannot afford abuses that
enrich doctors or drug companies at the expense of
taxpayers and patients. This settlement agreement and
the compliance steps that TAP has agreed to take will
reinforce the government's long-standing objective of
paying Medicare and Medicaid providers for the
reasonable costs of the drugs they administer."

"The urologists and the TAP employees
who knowingly participated in this broad conspiracy took
advantage of older Americans suffering from prostate
cancer. The indictment unsealed today alleges that TAP
employees sought to influence the doctors' decisions
about what drug to prescribe to patients by giving them
kickbacks and bribes, from free samples to free
consulting services to expensive trips to golf and ski
resorts to so-called educational grants," said U.S.
Attorney Sullivan. "In all instances where the kickbacks
worked to ensure the prescription of TAP's product
Lupron, the Medicare Program and the elderly Americans
suffering from prostate cancer paid more for their care
than if the doctor had prescribed the competitor's
product."

"Medicare beneficiaries and all
American patients need to get the right pharmaceuticals,
based on medical criteria, and at a fair price. This is
crucial both to ensure good quality health care and to
use our resources effectively. Today's settlement is a
clear message that the federal government will protect
the best interests of beneficiaries and taxpayers," said
HHS Secretary Tommy G. Thompson.

"This prosecution has resulted in the
largest criminal and civil recoveries in any health care
fraud case in the country. The fraud schemes used by TAP
Pharmaceuticals and others impacts significantly on the
integrity of TRICARE, the Department of Defense's
healthcare system," stated DCIS Special Agent in Charge
Edward Bradley. "Healthcare fraud increases patients'
costs and negatively effects the delivery of health care
services to over 8 million military members, retirees,
and their dependents."

The indictment unsealed today against
the seven individuals alleges that inducements to
physicians included free products; free consulting
services; trips to expensive golf and ski resorts; money
disguised as "educational grants," but in fact was used
and intended to be used for many purposes, including
cocktail party bar tabs, office Christmas parties,
medical equipment, travel expenses for urologists and
their staff to attend conferences; and discounts on
Lupron sold to treat endometriosis in women to effect a
lower price on Lupron used in the treatment of men with
prostate cancer.

The investigation commenced in the
District of Massachusetts in 1997 after a urologist
employed by Tufts Associated Health Maintenance
Organization ("Tufts HMO") in Waltham, Dr. Joseph
Gerstein, reported to law enforcement authorities that
he had been offered an educational grant if he would
reverse a decision he had made on behalf of Tufts that
it would only cover the less expensive drug Zoladex. As
charged in the indictment, SWIRSKI and CHASE met with
Dr. Gerstein after he began working with the FBI and the
Office of Inspector General, and during those meetings,
offered him $65,000 in educational grants that he could
use for any purpose "whatever," together with discounts
on other products, if he would reverse Tufts' decision
not to include Lupron on its formulary for treating
patients that it insured who were suffering from
prostate cancer. The investigation was also triggered by
a civil False Claims Act suit filed in 1996 by Douglas
Durand, after he had quit his employment at TAP as Vice
President of Sales, after just one year because of his
concerns about the illegal marketing conduct of some of
TAP's employees.

The civil False Claims Act provides
that where persons submit, cause others to submit, or
conspire to submit, false or fraudulent claims to the
United States Government, including its federal health
care programs, the Government is entitled to recover
treble damages and $5,500 to $11,000 for each false or
fraudulent claim submitted. Private individuals, like
Dr. Gerstein and Douglas Durand, are allowed to file
whistleblower suits under the False Claims Act to bring
the government information about wrongdoing, and if the
government is successful in resolving or litigating
their claims, to share in the recovery by receiving
generally 15% to 25% of the amount recovered. As a part
of today's resolution, those two individuals together
with Tufts Associated HMO will share as whistleblowers,
pursuant to the Congressional directive in the False
Claims Act, 17% of the civil recovery, or an amount of
approximately $95 million.

"The payment by TAP of nearly $900
million including the highest criminal fine ever imposed
on any health care company, and the indictment of the
six TAP employees sends a very strong signal to the
pharmaceutical industry that it best police its
employees' conduct and deal strongly with those who
would gain sales at the expense of the health care
programs for the poor and the elderly and the persons
insured by those programs," said U.S. Attorney Sullivan.

As part of a condition for doing
business in the future with providers who are members of
the Medicare and Medicaid programs, TAP agreed to enter
into an extensive Corporate Integrity Agreement. That
agreement provides for significant training of TAP's
sales and marketing employees and changes in supervision
and controls. It also requires TAP to report to the
Medicare and Medicaid programs accurate pricing
information showing TAP's true average sales price.

"In recent years, the pharmaceutical
industry has come under increasing scrutiny for its
pricing, sales, and marketing practices. The OIG,
together with other government agencies, will use all
available enforcement authorities, where appropriate, to
address these practices," said HHS Inspector General
Janet Rehnquist.

The entire amount of the $290 million
criminal fine paid by TAP will go to the Department of
Justice's Crime Victims Fund. The Fund was established
in 1984 by the Victims of Crime Act ("VOCA") and serves
as a major funding source for victim services throughout
the country. Each year, millions of dollars are
deposited into this fund from criminal fines, forfeited
bail bonds, penalty fees, and special assessments
collected by U.S. Attorney's Offices, U.S. Courts, and
the Bureau of Prisons. State assistance programs use
VOCA funds to provide or contract for services to
victims of rape, drunk driving, child abuse, domestic
violence, homicide, and other crimes. Victims of
federal, as well as state crimes, are eligible to
receive VOCA-funded services.

The investigation is continuing.

The investigation has been conducted
by the agents from the Federal Bureau of Investigation,
the Office of Investigations for the Office of Inspector
General for the Department of Health and Human Services,
the Food and Drug Administration's Office of Criminal
Investigations and the Department of Defense's Defense
Criminal Investigation Service. On the criminal side,
the investigation and prosecution are being handled by
Assistant U.S. Attorney Michael K. Loucks, Health Care
Fraud Chief. On the civil side, the investigation and
prosecution are being handled by Assistant U.S. Attorney
Susan Winkler, assisted by Department of Justice Trial
Attorney T. Reed Stephens. The Corporate Integrity
Agreement was negotiated by Office of General Counsel,
Office of Inspector General Assistant Counsel Mary
Riordan.

Department of JusticeOffice of Public AffairsFOR IMMEDIATE RELEASEMonday, December 20, 2010

WASHINGTON – Dey Inc., Dey Pharma L.P. (formerly
known as Dey, L.P.) and Dey L.P. Inc. have agreed to
pay $280 million to settle False Claims Act
allegations, the Department of Justice announced
today. This settlement
resolves claims by the United States that the
defendants engaged in a scheme to report false and
inflated prices for numerous pharmaceutical
products, knowing that federal health care programs
relied on those reported prices to set payment
rates. The actual sales prices for the Dey products
were far less than what Dey reported.

The United States alleged that Dey reported false
prices for the following drugs:
Albuterol Sulfate, Albuterol MDI, Cromolyn Sodium
and Ipratropium Bromide.
The difference between the resulting inflated
government payments and the actual price paid by
health care providers for a drug is referred to as
the “spread.” The larger the spread on a drug,
the larger the profit for the health care provider
or pharmacist who is reimbursed by the government.
The government alleges that Dey created artificially
inflated spreads to market, promote and sell the
drugs to existing and potential customers.
Because payment from the Medicare and Medicaid
programs was based on the false inflated prices, the
government alleged that Dey caused false and
fraudulent claims to be submitted to federal health
care programs and, as a result, the government paid
millions of claims for far greater amounts than it
would have if Dey had reported truthful prices.

This is the fourth such settlement with
pharmaceutical manufacturers that the Department of
Justice has announced this month. On Dec.7, 2010, the Department announced
settlements totaling $421.1 million involving
similar allegations against three other
manufacturers: Abbott Laboratories Inc., B. Braun
Medical Inc. and Roxane Laboratories Inc.

“With this settlement,
the Department of Justice has now recovered over $2
billion dollars from pharmaceutical manufacturers
arising from similar unlawful drug pricing schemes.
As the department alleged in its complaint against
Dey, by offering customers one price and then
falsely reporting inflated prices to the lists the
government uses when calculating how much to pay for
the drugs, pharmaceutical companies created an
incentive for the purchase of their drugs by
allowing buyers to pocket the difference between the
actual price of the drug and the inflated government
payment,” said Tony West, Assistant Attorney General
for the Civil Division of the Department of Justice.
“Taxpayer-funded
kickback schemes like this not only cost federal
health care programs millions of dollars, they
threaten to undermine the integrity of the choices
health care providers make for their patients.”

United States Attorney
Carmen M. Ortizof
the District of Massachusetts said, “Our
federally-funded health care programs pay for
prescription drugs based in part on pricing
information reported by pharmaceutical companies.
When a company reports falsely inflated prices for
the purpose of increasing its sales and profits, it
undermines the integrity of our health care system.
Drug companies must understand that they risk
substantial liability if they report false drug
pricing information.”

The settlement resolves a
whistleblower action filed under the False Claims
Act by Ven-A-Care of the Florida Keys Inc., a
Florida home-infusion company, and its principals,
entitled United States of America ex rel.
Ven-a-Care of the Florida Keys
Inc. v. Dey Laboratories,
et al., Civil Action No. 05-11084-PBS (D.
Mass).
The False Claims Act’s qui tam
provisions allow private persons with knowledge of
fraud to file suit on behalf of the United States
and share in any recovery.
As part of this settlement, the Ven-A-Care
whistleblowers will receive a share of approximately
$67.2 million.

“This
settlement with Dey highlights the Office of the
Inspector General’s decade-long commitment to
protecting against artificially inflated drug
prices,” said Daniel R. Levinson, Inspector General
of the Department of Health & Human Services.
“Our analyses of drug price reporting practices –
including the use of ‘Average Wholesale Price’ –
have consistently identified excessive Medicare and
Medicaid payments resulting from these practices.”

The case was handled by the Justice Department’s
Civil Division, the U.S. Attorney’s Office for the
District of Massachusetts and the Office of
Inspector General of the Department of Health and
Human Services.

This resolution
is part of the government’s emphasis on combating
health care fraud and another step for the Health
Care Fraud Prevention and Enforcement Action Team
(HEAT) initiative, which was announced by Attorney
General Eric Holder and Kathleen Sebelius, Secretary
of the Department of Health and Human Services in
May 2009. The partnership between the two
departments has focused efforts to reduce and
prevent Medicare and Medicaid financial fraud
through enhanced cooperation. One of the most powerful
tools in that effort is the False Claims Act, which
the Justice Department has used to recover more than
$5.3 billion since January 2009 in cases involving
fraud against federal health care programs. The
Justice Department’s total recoveries in False
Claims Act cases since January 2009 now approach
$6.8 billion.

BAYER TO PAY $14 MILLION TO SETTLE CLAIMS FOR
CAUSING PROVIDERS TO SUBMIT FRAUDULENT CLAIMS TO 45
STATE MEDICAID PROGRAMS

WASHINGTON, D.C.- Bayer Corporation
has agreed to pay a total of $14 million to the

United States and 45 states to settle
allegations under the federal False Claims Act that the
company caused physicians and other health care
providers to submit fraudulently inflated reimbursement
claims to the state and federally funded Medicaid
program, the Justice Department announced today. Bayer
reached the agreement with the Justice Department, the
United States Attorney's Office for the Southern
District of Florida in Miami, the Office of Inspector
General for the Department of Health and Human Services,
and a team of state negotiators from Maine, Nevada, New
York and Washington representing the National
Association of Medicaid Fraud Control Units.

The government's investigation of the
allegations, contained in a qui tam or whistleblower
lawsuit, in which the government plans to intervene
against Bayer, revealed that the pharmaceutical company
beginning in the early 1990's falsely inflated the
reported drug prices . referred to by the industry as
the Average Wholesale Price (AWP), the Direct Price and
the Wholesale Acquisition Cost . used by state
governments to set reimbursement rates for the Medicaid
program. By setting an extremely high AWP and,
subsequently, selling the product to doctors at a
dramatic discount, Bayer induced physicians to purchase
its products rather than those of competitors by
enabling doctors to profit from reimbursement paid to
them by the government.

The Bayer AWPs, at issue in the
investigation, involved several of Bayer's biologic
products such as Kogenate, Koate-HP, and Gamimmune,
which are widely used in treating hemophilia and immune
deficiency diseases.

The investigation further revealed
that the practice in which Bayer selectively engaged,
commonly referred to by drug manufacturers as "marketing
the spread," also has the effect of discouraging market
competition from manufacturers that do not inflate AWPs
as a way of inducing doctors to purchase their products.

In addition to the monetary
settlement, Bayer has reached a five year agreement with
the Department of Health and Human Services' Office of
Inspector General that the company's conduct will be
monitored by the government under a corporate integrity
agreement. Under the compliance agreement, Bayer will
provide the state and federal governments with the
average selling prices of its drugs in order to
facilitate the government's setting of fair
reimbursement rates for the company's products and,
potentially, the products of any competitors attempting
to take advantage of Bayer's cooperation.

The parties also are settling
allegations that Bayer knowingly underpaid the Medicaid
program for rebates owed by it to the states. The
Medicaid Rebate program requires drug companies to pay
quarterly rebates to states in a way intended to account
for discounts given by them to customers. Bayer was
required to report to the Health Care Financing
Administration the best price it offered to any
commercial, for-profit customer and pay a quarterly
rebate based, in part, upon that best price. Bayer
understated the extent of the discounts given to certain
customers thereby allowing the company to underpay the
rebates its owed.

Ven-A-Care of the Florida Keys Inc.,
the qui tam relator or whistleblower which filed the
suit on behalf of the United States, will receive 20
percent of the federal government's share of the
recovery. Bayer's headquarters are located in
Leverkusen, Germany.

The United States Attorney’s Office
for the District of Delaware, the Department of Health
and Human Services Acting Principal Deputy Inspector
General Dara Corrigan, Terrell L. Vermillion, Director,
Office of Criminal Investigations, Food & Drug
Administration, and SAIC Edward T. Bradley of the
Northeast Field Office for the Defense Criminal
Investigative Service announced that AstraZeneca
Pharmaceuticals LP (“AstraZeneca”), a major
pharmaceutical manufacturer headquartered in Wilmington,
Delaware, today pleaded guilty in federal district court
in Wilmington, Delaware to a healthcare crime and agreed
to pay $355,000,000 to resolve criminal charges and
civil liabilities in connection with its drug pricing
and marketing practices with regard to Zoladex, a drug
sold by AstraZeneca Pharmaceuticals LP and used
primarily for the treatment of prostate cancer. The
general components of the global agreement are as
follows:

AstraZeneca pleaded guilty to
conspiring to violate the Prescription Drug Marketing
Act (“PDMA”) by causing to be submitted claims for
payment for the prescription of Zoladex which had been
provided as free samples to urologists. This criminal
conduct caused losses of $39,920,098 to Medicare,
Medicaid and other federally funded insurance programs.
As part of the plea agreement, AstraZeneca agreed to pay
a $63,872,156 criminal fine;

AstraZeneca agreed to settle its
federal civil False Claim Act liabilities and to pay the
U.S. government $266,127,844 to resolve allegations that
the company caused false and fraudulent claims to be
filed with the Medicare, TriCare, Department of Defense
and Railroad Retirement Board Medicare programs as a
result of AstraZeneca’s fraudulent drug pricing schemes
and sales and marketing misconduct;

AstraZeneca agreed to settle its
civil liabilities to the Medicaid program by paying to
the United States and the states a total of $24,900,000
to resolve allegations that it caused false and
fraudulent claims to be filed with the states as a
result of its drug pricing and marketing misconduct and
that it failed to provide the state Medicaid programs
AstraZeneca’s best price for those drugs as required by
law. The National Association of Medicaid Fraud Control
Units has reached an agreement in principle to settle
the state portion of these liabilities on behalf of the
state Attorneys General; and

AstraZeneca has agreed to comply with
the terms of a corporate integrity agreement which
ensures, among other things, that AstraZeneca will
report to the Medicare and Medicaid programs the average
sale price for drugs reimbursed by those programs and
will promote, through internal training and other
programs and policies, marketing and sales practices
that are in full compliance with the law.

Zoladex is marketed by AstraZeneca
primarily for the treatment of prostate cancer, as is
the drug Lupron which is produced by TAP
Pharmaceuticals, Inc. (“TAP”). In October 2001, TAP
agreed to pay $875,000,000 to resolve civil and criminal
liabilities in connection with its pricing and marketing
of Lupron.

While Medicare does not pay for most
drugs needed by Medicare beneficiaries, Medicare covers
some drugs, such as Zoladex, that must be injected under
the supervision of a physician.

In documents filed with this case,
the United States alleged that from January 1991 through
December 31, 2002, Astra Zeneca engaged in the following
conduct involving the marketing, sale and pricing of
Zoladex for the treatment of prostate cancer:

(i) Employees of AstraZeneca provided
thousands of free samples of Zoladex to physicians
knowing and expecting that certain of those physicians
would prescribe and administer the free drug samples to
their patients and thereafter bill those free samples to
the patients and to Medicare, Medicaid, and other
federally funded insurance programs;

(ii) In order to induce certain
physicians, physicians’ practices, and others to
purchase Zoladex, AstraZeneca offered and paid illegal
remuneration in various forms including free Zoladex,
unrestricted educational grants, business assistance
grants and services, travel and entertainment,
consulting services, and honoraria;

(iii)Also in order to induce
physicians to purchase Zoladex, AstraZeneca marketed a
“Return-to-Practice” program to physicians. This
Return-to-Practice program consisted of inflating the
Average Wholesale Price (“AWP”) used by Medicare and
others for reimbursement of the drug , deeply
discounting the price paid by physicians to AstraZeneca
for the drug (“the discounted price”), and marketing the
spread between the AWP and the discounted price to
physicians as additional profit to be returned to the
physician’s practice from Medicare reimbursements for
Zoladex;

(iv) AstraZeneca set the AWP for
Zoladex at levels far higher than the majority of its
physician customers actually paid for the drug. As a
result, AstraZeneca’s customers received reimbursement
from Medicare and state Medicaid programs and others at
levels significantly higher than the physicians’ actual
costs or the wholesalers’ average price; and

(v) AstraZeneca misreported and
underpaid its Medicaid rebates for Zoladex used for
treatment of prostate cancer, i.e., the amounts that it
owed to the states under the federal Medicaid Rebate
Program. AstraZeneca was generally required on a
quarterly basis to rebate to each state Medicaid program
the difference between the Average Manufacturer Price
(“AMP”) and its “Best Price”. AstraZeneca falsely
reported the Best Price for Zoladex used for treatment
of prostate cancer because AstraZeneca calculated its
Best Prices for Zoladex without accounting for
off-invoice price concessions provided in various forms
including cash discounts in the form of grants, services
and free goods contingent on any purchase requirement.

The investigation commenced after the
filing of a civil False Claim Act suit by Douglas Durand
who was employed as the Vice President of Sales for TAP
Pharmaceutical Products, Inc. The civil False Claims Act
allows for private individuals like Durand to file a
whistleblower suit to bring the government information
about wrongdoing. Where persons submit, cause others to
submit, or conspire to submit false or fraudulent claims
to the United States government, the government is
entitled to recover treble damages and $5,500 to $11,000
for each false or fraudulent claim. If the government is
successful in resolving or litigating its claims, the
whistleblower may share in the recovery by receiving
from 15 to 25% of the amount recovered. As part of this
settlement, Durand will receive a 17% share of the civil
recovery pursuant to the False Claims Act whistleblower
provisions. This amounts to approximately $47.5 million.

Prior to today’s guilty plea by
AstraZeneca, three physicians have been charged, and two
have pleaded guilty, for their role in conspiring to
bill for Zoladex samples. Dr. Saad Antoun, a urologist
practicing in Holmdel, New Jersey, was charged on
January 15, 2002, and pleaded guilty to conspiracy on
September 18, 2002. Dr. Stanley Hopkins, a urologist
practicing in Boca Raton, Florida, was charged on
September 30, 2002, and pleaded guilty to conspiracy on
December 17, 2002. Dr. Robert Berkman, a urologist
practicing in Columbus, Ohio, was charged on May 19,
2003.

“This prosecution of a pharmaceutical
company demonstrates our resolve to protect federal
health insurance programs when they are abused to enrich
drug companies and doctors. We will pursue those whose
criminal conduct imposes enormous expense on trust funds
that the taxpayers fund to protect and preserve the
health of our elderly, our poor, our military, and its
dependents.” said Associate Attorney General Robert D.
McCallum, Jr. of the United States Department of
Justice.

"The public has been well served by
the investigators who uncovered the extent of this
scheme and brought it to an end," said Commissioner of
Food and Drugs Mark B. McClellan, M.D., Ph.D. "FDA will
not tolerate criminal conduct that exploits patients,
plunders the national treasury, and adds to the cost of
health care."

“Today's settlement shows that the
federal government is holding the pharmaceutical
industry strictly accountable for improper conduct as
well as those who conduct business with them,”
Department of Health and Human Services Acting Principal
Deputy Inspector General Dara Corrigan stated. “The
Office of Inspector General, along with our partners,
will not tolerate this type of behavior, and we will
continue to investigate allegations of illegal conduct
concerning the pharmaceutical industry.”

"Today's plea and settlement
demonstrates our strong commitment to protecting the
American public from corporate greed, in whatever form
that it may occur", said SAC Bradley. "This commitment
extends to all participants in the many healthcare
systems in this country, including our brave service men
and women and their dependents. This case sends a strong
message to the pharmaceutical industry that fraudulent
activity, such as the scheme perpetrated by AstraZeneca,
will not be tolerated and will be investigated and
prosecuted to the full extent of the law."

The entire amount of the nearly $64
million criminal fine paid by AstraZeneca will go to the
Department of Justice’s Crime Victims Fund. The Fund was
established in 1984 by the Victims of Crime Act (“VOCA”)
and serves as a major funding source for victim services
throughout the country. Victims of federal as well as
state crimes are eligible to receive VOCA-funded
services, and state Assistance programs use VOCA funds
to provide or contract for services to victims of rape,
drunk driving, child abuse, domestic violence, homicide,
and other crimes.

The investigation has been conducted
by the Office of Inspector General for the U.S.
Department of Health and Human Services, the Office of
Criminal Investigations for the Food and Drug
Administration, the Defense Criminal Investigative
Service and the Federal Bureau of Investigation. On the
criminal side, the investigation and prosecution are
being handled by Assistant U.S. Attorney Beth
Moskow-Schnoll. On the civil side, the investigation and
prosecution are being handled by Assistant U.S. Attorney
Virginia Gibson.

As insiders it is common for
pharmaceutical representative whistleblowers, medical
device sales representative whistleblowers, drug
marketing representative whistleblowers, and other
marketing executives to specialized knowledge of drug
price fraud schemes and fraudulent pricing schemes.
As such, it is important for the pharmaceutical
representative whistleblower, medical device sales
representative whistleblower, drug marketing
representative whistleblower, or other marketing
executive whistleblower that is interested in self
protection and blowing the whistle on drug price fraud
to obtain and preserve evidence of the drug pricing
fraud. Whether this evidence is in e-mail
messages, memos, marketing plans, marketing materials,
recordings, or other documents, it is important for the
whistleblower to have evidence of the marketing fraud.
It is also often helpful to have fellow whistleblowers
that can help build the Medicare Drug Price Fraud
Lawsuit or Medicaid Drug Price Fraud Lawsuit.

Being the First to File on the Fraud is
Essential for Recovery Under the False Claims Act and
can Prevent Potential Criminal Liability in
Pharmaceutical Representative Medicare Fraud, Medical
Device Sales Representative Medicare Drug Price Fraud,
Mediciad Drug Pricing Fraud, and other Medicaid Drug
Fraud Lawsuits

It is also essential to not delay in
coming forward with a False Claim Act Drug Price Fraud
Lawsuit as the first whistleblower to file is eligible
to be a relator and make a large recovery for exposing
the fraud. Additionally, when the fraudulent
scheme is exposed, the people that kept the fraud secret
can sometimes be found liable for criminal activity for
not exposing the fraud that was being committed and
further be held liable for continuing criminal activity.

It is also important to understand
potential whistleblower protections under the False
Claims Act and to discuss with an attorney how to
prepare for potential retaliation or aggressive attacks
by the employer or contractor. For more
information on this topic please go to the following web
page on
False Claims Act Lawsuit Whistleblower Protections.

It is important that Accountants,
Drug Executives, and Health Care Professions blow the
whistle on Pharmaceutical Companies and Drug Companies
that engage in schemes to report false and inflated
prices for pharmaceutical products, knowing that federal
healthcare programs rely on those reported prices to set
payment rates are committing Drug Price Fraud.
These large drug companies are defrauding the United
States Government out of millions or billions of
dollars. As a Texas Drug Price Fraud Lawyer, he
works with other powerful qui tam lawyers that handle
large Health Care Government Fraud cases. He works
with San Antonio Drug Price Fraud Lawyers, Dallas
Fraudulent Drug Price Scheme Fraud Lawyers, Houston
Medicare Drug Price Fraud Lawyers, and other Texas
Health Care Drug Price Fraud Lawyers as well as with
Health Care Average Wholesale Price and Drug Price Fraud
Lawyers throughout the nation to blow the whistle on
fraud that hurts the United States.

If you are a drug marketing
representative, drug marketing executive, medical device
marketing representative, medical device marketing
executive, medical doctor, or other pharmaceutical or
medical device professional with original source
knowledge of drug price fraud, it is important that you
are the first to step forward to blow the whistle on the
fraud. If you are a pharmaceutical executive drug
price fraud whistleblower that is aware of fraudulent
drug price fixing, drug kickbacks, Medicaid drug price
fraud, or other Medicare drug price fraud by a
pharmaceutical marketing department, health care
provider, or drug company, feel free to
contact Medicare and Medicaid Drug Price Fraud
Whistleblower Lawyer Jason Coomer via e-mail message
or our
submission form about a potential Medicare drug
price fraud whistleblower lawsuit, Medicaid drug fraud
whistleblower lawsuit, or other pharmaceutical executive
drug fraud whistleblower qui tam lawsuit.

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